Investors withdrew up to $1.6 billion in cryptocurrency from Binance, the world’s largest crypto exchange, after the platform was sued by the Commodity Futures Trading Commission, a top US regulator (CFTC).
The US Commodity Futures Trading Commission (CFTC) sued the crypto giant, as well as its CEO and former top compliance executive, alleging that they were running a “illegal” exchange and a “sham” compliance programme.
Following the CFTC’s lawsuit, Binance saw $1.6 billion in total withdrawals and $852 million in the last 24 hours, up from an average of $385 million per day over the previous two weeks, according to blockchain data tracker Nansen.
According to Nansen research analyst Martin Lee, the outflows were higher than usual, but not as high as on December 13, when investors withdrew $3 billion from Binance due to concerns about the company’s reserves.
“The crypto market cap has increased by 2.56% to $1.16 trillion, with BTC and ETH leading the charge. The CFTC has focused attention on Ethereum by expressing its support for ETH as a commodity, resulting in a mini-rally of 3.92% in just 24 hours. BTC is up 1.54% at the time of writing and is currently trading at $27,371.52. Investors are keeping a close eye on developments at Binance in relation to CFTC action “said Shivam Thakral, CEO of BuyUcoin.
The CFTC’s lawsuit was “unexpected and disappointing,” according to Binance. The cryptocurrency platform stated that it has been working with the regulator for more than two years, that it has increased its compliance staff, and that it will continue to collaborate with authorities in the US and elsewhere.
According to the CFTC, one unidentified US firm traded on Binance through a Cayman Islands subsidiary. Another traded on Binance after signing a “services agreement.” “with an ostensibly unrelated entity incorporated under the laws of Jersey, a British dependency. According to the complaint filed in federal court on Monday, a third began trading through a Singapore subsidiary before switching to an entity incorporated in the Cayman Islands as well.
Binance also advised some US customers to use virtual private networks (VPNs) to conceal their location, as well as some “VIP customers.” “According to the CFTC, companies with significant US ties should use shell companies. According to the CFTC, among those VIPs were trading firms based in the United States.
